Fate of Vizag Steel emerges as a flashpoint as elections draw near in Andhra Pradesh

Rhetoric dominates the electoral campaign as parties rush to declare themselves the protectors of the public sector enterprise against privatisation.

Leaders of the Visakha Ukku Parirakshana Porata Committee urging Prime Minister Narendra Modi to stop the privatisation of Visakhapatnam Steel Plant (Vizag Steel) in Visakhapatnam in November 2022. | Photo Credit: V RAJU

The Bharatiya Janata Party’s return to power at the Centre in 2019 marked the beginning of their unrelenting stance to privatise the state-owned Visakhapatnam Steel Plant (Vizag Steel) in Andhra Pradesh. However, as the 2024 elections draw close, State leaders from the BJP and their alliance partners, the Telugu Desam Party (TDP) and JanaSena Party (JSP), have been attempting damage control and political manoeuvring.

The 2024 Assembly election and the Lok Sabha election are scheduled to be held concurrently on May 13 in Andhra Pradesh. Vizag Steel falls under the Gajuwaka Assembly constituency and the Visakhapatnam Lok Sabha constituency. The campaigns of all parties have begun in full swing in the region.

WATCH:

The politicisation of the Vizag Steel issue continues in the electoral campaigns without any relief for the workers and employees. | Video Credit: Reporting & visuals by Ayesha Minhaz; Studio camera & editing by Samson Ronald K.; Presented by Abhinav Chakraborty

On March 16, the Telangana Chief Minister, Anumula Revanth Reddy, participated in a public meeting in Visakapatnam and reiterated the Congress’ stand against privatisation. While the Congress’ prospects in Andhra Pradesh are bleak, the ongoing election is paving the way for a gradual revival.

The primary contenders to power in Andhra Pradesh are the the incumbent Yuvajana Sramika Rythu Congress Party (YSRCP) and the BJP-TDP-JSP under the National Democratic Alliance (NDA). Even as the TDP and the JSP previously extended solidarity to the workers’ fight against privatisation, their alliance with the BJP puts them in a tricky situation. Most leaders have thus been resorting to vague promises and shifting the blame.

At his campaign meeting in Gajuwaka on April 14, former Chief Minister and TDP supremo Nara Chandrababu Naidu targeted the incumbent Chief Minister Jagan Mohan Reddy. Naidu claimed that Reddy ignored his request to lead the agitation and go to Delhi (to the Prime Minister’s office) together.

Rhetoric over reality

In an election campaign on April 7 in Anakapalli, JSP chief Pawan Kalyan spoke about the Vizag Steel issue without giving clear plans. He said there is no use criticising the Central government and PM Modi and urged people to come together (and vote) as he cannot accomplish it (that is, save the plant) on his own.

Kalyan steered the blame towards the Visakha Ukku Parirakshana Porata Committee (VUPPC), the official collective of Vizag Steel’s workers and trade unions such as the Centre for Indian Trade Unions, the All-India Trade Union Congress, and the Indian National Trade Union Congress, among others. He claimed that the VUPPC did not take up his offer to meet Modi. But the chain of events until now suggest otherwise.

For the past three years, the collective has been steering the movement with an ongoing relay hunger strike and protest demonstrations. VUPPC’s efforts are credited with stalling the Central government’s privatisation attempts.

Naidu and Kalyan have yet to issue a joint statement on behalf of the NDA. They insist they will raise the issue with the Central government after being voted to power in the upcoming Assembly and Lok Sabha elections. VUPPC leaders have called on people to vote against the BJP and its allies.

The YSRCP candidate for Gajuwaka, Gudivada Amarnath, stated in March that if voted to power again, his party could “stall” the privatisation drive. Even as his party leaders responded to the ongoing statements of the BJP-TDP-JSP alliance on Vizag Steel, Reddy has yet to respond. Nevertheless, trade unions and workers do not find such verbal assurances trustworthy. It does not help that both TDP and YSRCP had a subservient and tactical relationship with the BJP in the last five years, and neither strongly challenged the many instances of indifference towards Andhra Pradesh.

“For the past three years or so, all parties have been saying it verbally (for the sake of it) but haven’t raised it effectively in parliament. Neither TDP nor YSRCP or JSP helped build the anti-privatisation agitation here [in Visakhapatnam],” said VUPPC chairman D. Adinarayana. Whether it is the TDP, the JSP, or the YSRCP, none of these parties has a resolution on protecting public sector enterprises in the party’s ideology, he told Frontline.

A chequered history

Vizag Steel is India’s first shore-based steel plant, and it has been operational since 1991. The chequered story began much earlier in the 1960s. As the project was delayed, an indefinite fast and State-wide agitation started in 1966, demanding the Central government sanction the public sector steel plant. Police firings killed nearly 32 people across the State in under a month. A few months later, then Prime Minister Indira Gandhi issued an assurance and eventually laid the foundation stone in 1971.

Built on over 20,000 acres of land, Vizag Steel currently employs over 13,500 permanent workers, executives, and 20,000 contract-based workers. Adinarayana says nearly 10 lakh people of Visakhapatnam are directly or indirectly dependent on the plant.

The slogan “Visakha Ukku Andhrula Hakku” (Visakha Steel is the right of people of Andhra) still resonates with the people of Andhra Pradesh, who feel not only a sense of ownership towards the plant but also an emotional attachment to the movement that accomplished it. Thus, the VUPPC movement found support not only from the workers and employees but also from civil society groups across the State. Many working-class groups of Visakhapatnam have also extended solidarity to the agitation; other public sector employees and, more recently, even IT employees participated in a protest demonstration.

JanaSena Party president Pawan Kalyan during an election rally. On the issue of Vizag Steel, Kalyan did not have much to offer in terms of a concrete plan and tried to blame the collective of workers and trade unions opposing the privatisation drive. | Photo Credit: ARRANGEMENT

Several attempts have been made to privatise Vizag Steel over the past decades, but the BJP-led NDA’s second term pushed this to an extreme. In 2019, the Central government first tried to execute a joint venture between the South Korean manufacturer POSCO and the Rashtriya Ispat Nigam Limited (RINL), Vizag Steel’s corporate entity. It was presented as a win-win, but unions pushed back, calling it an attempt to create a lucrative business for POSCO.

“POSCO would have used our product, manufactured auto-grade steel, and sold it at a potential profit margin of about Rs.70,000 per tonne. Vizag Steel would have made a profit of Rs.300-500 per tonne after all the complex processing,” said J. Ayodhya Ram, leader of the RINL-VSP recognised union, speaking to Frontline on the objections to the proposed venture.

Vizag Steel has a strategic location with access to a developed seaport, airport, railway, and road transport. Most importantly, it has a vast land bank. Ram said these factors make it an attractive location for private steel firms.

A manufactured crisis?

Protests deterred the POSCO deal in 2019. But in January 2021, the Cabinet Committee on Economic Affairs announced a 100 per cent divestment of Vizag Steel, calling it unviable to run due to recurrent losses.

Unions and experts call Vizag Steel’s crisis and losses a manufactured one. The plant has suffered decades of Central government apathy and poor policies. It remains the only public sector steel enterprise without a captive iron ore mine, which adds substantial raw material costs and diminishes profits.

Trade unions and workers managed to stall privatisation attempts for the past three years. However, in March 2023, RINL floated an expression of interest to address the shortage of working capital and raw materials. Activists and leaders called it a conscious attempt to establish that Vizag Steel could no longer function without private support. The unions demanded that Jindal Steel and Power Ltd (JSPL) and the JSW Group not be allowed to bid. They had contended that the two firms are direct competitors to Vizag Steel and, hence, such a partnership would be unsuitable for the plant’s long-term interests and goals.

In December 2023, the RINL management announced an MoU with JSPL. The MoU would lead to Rs.800-900 crore of working capital advance and raw materials for Vizag Steel’s Blast Furnace 3 (BF3). Operations at BF3 have been paused since 2021 due to a shortage of both. Union leaders allege that they have yet to be informed of the MoU’s finer details and conditionalities. Demonstrations ensued, but the deal could not be reversed.

Former secretary to the Government of India E.A.S. Sarma, who has written multiple times to the Union Steel Ministry in the past three years about Vizag Steel’s problems, once again wrote an open letter to Union Steel Secretary Nagendra Nath Sinha in December 2023, reiterating his longstanding concerns about the lack of efforts in providing a debt-restructuring facility, liquidity support, and a captive iron ore mine to Vizag Steel.

Can SAIL save Vizag Steel’s boat?

Meanwhile, VUPPC and the Steel Executives Association (SEA) have been pushing for a re-merger of RINL-VSP with Steel Authority of India Limited (SAIL), a public-sector enterprise. Before RINL was established, Vizag Steel was under SAIL (1982).

K.V.D. Prasad, general secretary of SEA, told Frontline that it is the permanent solution to all problems ailing Vizag Steel. Policy changes negate the option of a captive iron ore mine. For Vizag Steel Plant to have the security of a mine, it has to be merged with either National Mineral Development Corporation (NMDC) or SAIL. As NMDC is not in the steel business, a merger with SAIL is the most ideal one, explained Prasad.

Activists also remind that the Central government cannot hand over land acquired for a public purpose to a private company. “People gave land to Vizag Steel, hoping their children would get jobs. Over 7,000 such families have yet to get jobs. Justice has to be done for their sacrifices,” M. Sarat, vice president of Human Rights Forum, Andhra Pradesh State Committee, said, speaking to Frontline.

“It’s normal now for all the parties to come and make whatever promises serve them well. Post-elections, the movement will pick up momentum again, and we are confident that the people and civil society will stand by Vizag Steel,” he added. For now, the politicisation of the Vizag Steel issue continues in the electoral campaigns without any relief for the workers and employees.